When Does A Business Exist?

La Divina Maple Now Open by Infrogmation of New Orleans

Last Friday I had dinner with friends. Many of them are entrepreneurs and/or have major creative side endeavors. One of my friends, Sam, was excited to share that she had created an LLC for her new business. We were all happy for her to strike out on her own. I asked her how long it took to get the approval back from the Arizona Corporation Commission.

“Five days. I had it expedited because I didn’t want to wait,” she said.

Then it struck me – no one tells entrepreneurs that they don’t have to wait to get their LLC approved by the Arizona Corporation Commission before they can open their doors. Unless you’ve taken a class on business formation, you don’t know that you’re are allowed to call your business an LLC and conduct business as an LLC as soon as your file the paperwork and pay the fee. My friend paid an extra $35 for expedited filing because she thought her hands were tied until she her business had been approved. I bet a lot of people make the same mistake because it’s a logical assumption.

One of the first things I did when I opened this firm was file an application for a PLLC. It took almost six weeks to get the letter from the State saying that the Articles of Organization for my business were approved.  While I waited for my approval, I opened bank accounts, purchased software and equipment, created a website, filed my application for trade name protection, and entered into contracts as a PLLC. All of those activities were completely legitimate.  I kept a copy of my PLLC application in case anyone needed proof that I had filed it.

So what’s the take-home lesson? For most people, you can save yourself $35, file a regular LLC application, and conduct your business as an LLC once you’ve sent in your LLC application and fee. Don’t wait for approval from the Arizona Corporation Commission to get your business up and running.

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Comments

  1. Seriously? I wonder if this applies to California! I just paid an exorbitant fee to get it done in 48 hours, instead of six weeks. Argh!

    • I don’t know what the rule is in California – call the corporation commission. It’s one of those random things that no one thinks to call the corporation commission to ask if all they have to do is file or if they have to wait for approval before conducting business.

  2. While this may be true; My bank will not open an account until I have the approval back from the ACC, additionally, the City of Mesa will not issue sales tax licenses for the city until the ACC approves the LLC paperwork. This is just how my personal experience went.

    • I’ve heard similar stories to yours. My bank opened an account with a copy of my paperwork to the state. You’re allowed to act on behalf of the business once the paperwork is in the mail, but it obviously doesn’t mean everyone will be willing to do business with you.

Trackbacks

  1. […] You have the option to pay an additional fee to expedite your application, but in most cases that is not necessary. You are allowed to act as if the business exists when you submit your paperwork to the Corporation […]

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